Poxviruses, unlike other DNA viruses, replicate in the cytoplasm of the cell and encode most or all of the enzymes and factors needed for transcription of their genomes. Studies with vaccinia virus indicated that the genes are divided into three temporal classes - early, intermediate, and late - that are regulated in a cascade fashion. Vaccinia virus provides a unique system, for combining genetic and biochemical approaches for investigating mechanisms of gene regulation, that has resulted in many basic discoveries. Further progress was made in defining the viral proteins involved in transcription and in understanding their roles. During the past year, two additional RNA polymerase subunit genes rpo18 and rpo7, encoding polypeptides of 18,000 and 7,000 Daltons, were located within the vaccinia virus genome. The smaller one appears to be homologous to the smallest subunit of eukaryotic RNA polymerase. There are 8 different core subunits known to be present in the RNA polymerase. In addition, a 94,000 Dalton RNA polymerase specificity factor, named rap94, was found to be associated with the transcriptionally active RNA polymerase and shown to be required for transcription. A detailed analysis of the structure of intermediate class promoters indicated they are composed of a 14 base pair core sequence that is rich in adenosine and thymidine residues separated by one turn of the double helix from a TAAA initiator element. These structural features distinguish intermediate promoters from both early and late promoters and provide a basis for regulated gene expression. Vaccinia virus encodes enzymes for modifying both ends of mRNA. This past year, the genes encoding the two subunits, VP39 and VP55, of the heterodimeric poly(A) polymerase were identified. VP55 was found to be the catalytic subunit whereas VP39 stimulated elongation of poly(A) tails. VP39 was also shown to be methyltransferase that methylates the cap structure of mRNA which is required for translation.